Financial Planning
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Transcript of Financial Planning
![Page 1: Financial Planning](https://reader036.fdocuments.us/reader036/viewer/2022062721/568138b1550346895da06fc3/html5/thumbnails/1.jpg)
Financial Planning
![Page 2: Financial Planning](https://reader036.fdocuments.us/reader036/viewer/2022062721/568138b1550346895da06fc3/html5/thumbnails/2.jpg)
Budget
• A spending plan
• Set for a given period of time
• Prepared for a specific
amount of money
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What is the difficulty in budgeting?
Self Control!
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To begin a budget….
• You must have INCOME
money received from doing work.
• You must know your EXPENSES
things on which you must spend
your money.
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Two Types of Expenses:
• FIXED – expenses that are repeated with the same amount each time they are paid.
Examples: rent, mortgage, car
payment, insurance
• VARIABLE – expenses that fluctuate in amount, each time they are paid.
Examples: Texas electricity bill,
water bill
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So…..
To make a budget you would take your income minus your expenses.
INCOME – EXPENSES = BUDGET
BUT WAIT!!!!!!!!!!
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• Your annual salary (GA) Gross Annual – is the amount you are contracted to earn
per year.
$24,000
• You must figure out how much that is
a month. This is number is called your
(GM) Gross Monthly
$24,000 / 12 = $2000
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Uncle Sam gets his $$$ 1st
• This amount comes directly out of your paycheck. Your GM minus taxes (27%) is your
(NM) NET MONTHLYyour take-home pay
$2000 x 27% = $540 (taxes)
$2000 - $540 = $1460 NM
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Start your monthly budget
$1460 (NM) – expenses
Expenses are given a % of NMHousing * Food * Transportation
Clothing * Saving * RecreationMedical * Personal
Other
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Expenses
• Housing – (fixed) usually the largest percentage in a budget. Get room-mate(s) to split costs.
***Housing category CANNOT be more than 40% of salary***
• Food – (variable) decide how you like to eat…..steak or ramen? Do you eat a special diet? Could be as low a 8% for women.
• Clothing – (variable) do you wear a uniform to work? Or have to buy/wear suits? Wear out your shoes? Like to shop?
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• Transportation – (fixed or variable) walk, ride bus, drive car, carpool?
Good advise….pay off your car if you can. *car payment
*insurance
*oil changes/ repairs/ state inspections
*gasoline
• Savings – (fixed) DO IT!!!
• Start early, stay consistent.
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• Recreation – (variable) higher for singles.
Dating - wine & dine or blockbuster night? *fitness club
*weekend fun
*vacations
• Medical – (variable) regular prescriptions,
co-pay for sick visit to doctor, get-well meds.
• Personal – (variable) cosmetics, hair, nails, gifts, personal hygiene products. Pay yourself!!!
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Figuring out the budget
If you know the money amount and need to find the percentage amount:
NM/$=%
$1460 (NM) / $475 (housing) = 32.5%(round up = 33%)
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Ready
To
Make
Your
Own
Budget?